Why Do Clients Need Legal Expenses cover?
Commercial litigation is a reality in today’s business environment. Litigation manifests itself in a number of different ways:
- Contract Disputes
Business revenue is supported by the contracts they have with their suppliers and customers. If revenue stops as a contract is disputed, and legal costs are incurred, the lack of any insurance protection can seriously damage a business’s cash flow.
- Employment Disputes
Employment claims are an inevitable result of poor employee management. Employees know their legal rights. The average number of Employment Tribunal claims over the last few years is 1 for every 200 employees (much more likely than a fire claim). With the cost of litigation and awards of compensation increasing, can you afford not to be advising your clients about the availability of cover?
- Tax Disputes
The Revenue is pursuing a strategy of “dash for cash”. With a gaping hole in public finances the Revenue are aggressively targeting smaller firms with Inspectors told to bring in as much additional Revenue as possible.
- Criminal Prosecution and Corporate Manslaughter
Breach of the red tape of business compliance through health & safety, environmental protection, food safety or trading standards can lead to a criminal offence and a prosecution. Corporate Manslaughter and gross negligence manslaughter are a primary concern of Directors. Legal expenses can assist not only with the cost of defending a prosecution, but also guilty pleas where the punishment can be mitigated.
- Property Owners
Any dispute over possession of property, breach of the lease agreement or damage done to the property can result in complicated and expensive litigation.
- Statutory Licence
The licence that determines the business’ right to operate may be revoked, altered, or refused renewal. With no means to operate and bring in revenue, insurance to challenge a decision is vital in securing the right to continue to operate the business.
PRS offer a comprehensive commercial legal expenses product as standard, however we recognise not all businesses are the same and may need specific types of cover. One of our advisers would be more than happy to discuss the options available to you.
As a broker we have been asked why Contractors need to purchase Professional Indemnity Insurance. They don’t really understand how it might affect their contracting clients or what levels of cover they need. So, we thought we’d let you have some details of where their Public Liability Insurance would not cover claims that have occurred to help you explain the potential gaps in your cover.